Eliza Wong
Key Takeaways
– Regulators in Chengdu, Guangzhou, and Beijing are implementing stricter residential space measurement standards to combat deceptive marketing practices
– Some developers have been reporting space efficiency ratios exceeding 130% through questionable measurement methods including counting elevator lobbies and convertible spaces
– The crackdown aims to refocus the market from competing on superficial metrics toward genuine housing quality and sustainable development
– Market data shows that properties with extremely high space efficiency ratios are experiencing declining sales performance as the novelty wears off
The Space Efficiency Race Intensifies Regulatory Scrutiny
China’s property market has witnessed an unusual competition in recent months—developers aren’t just competing on price but increasingly on space efficiency ratios (得房率). While improved spatial design represents progress toward better housing, some developers have crossed into regulatory gray zones by employing “area-stealing” techniques that artificially inflate reported measurements. The space efficiency ratio phenomenon has become so pronounced that regulators in multiple cities have stepped in with new guidelines to restore measurement integrity and protect consumers.
Understanding Space Efficiency Measurements
The space efficiency ratio refers to the percentage of a property’s total area that is actually usable by residents, calculated by dividing the interior space by the total construction area. Traditionally, ratios around 80-85% were considered standard for quality developments. However, the recent surge in properties claiming ratios exceeding 100%—with some reaching 130%—has raised eyebrows among regulators and industry experts alike. This space efficiency ratio inflation has become a central marketing point in a softening market where developers seek any competitive advantage.
Chengdu Leads Regulatory Response With Updated Guidelines
On September 15, Chengdu released supplemental provisions to its Urban Planning Management Technical Regulations that specifically address residential space measurement. The new rules cap the total area of auxiliary spaces—including balconies, bay windows, entrance gardens, sky gardens, terraces, equipment platforms, and open elevator lobbies—at 30% of a project’s total floor area. This represents a significant shift from previous regulations that limited these spaces to 20% of individual unit area but excluded certain areas like open elevator lobbies from calculation entirely.
Closing the Open Elevator Lobby Loophole
According to analysis by CRIC Sichuan, the regulatory change appears superficially to increase allowable space but actually targets specific abuses. Previously, open elevator lobbies (入户光厅) weren’t counted toward the 20% limit, leading developers to create increasingly massive lobby spaces—some exceeding 30 square meters—that were marketed as convertible “garden dining areas” or “entreception rooms.” The new 30% cap includes all auxiliary spaces, effectively constraining this practice. The updated guidelines also incorporate previously excluded areas like corridors, voids, lattice spaces, and flower pools into calculations, creating a more comprehensive measurement framework.
National Trend: Guangzhou and Beijing Tighten Standards
Chengdu isn’t alone in addressing measurement irregularities. Guangzhou began implementing stricter rules in June after previously allowing expanded balcony areas that pushed space efficiency ratios to 125-130%. The southern city now strictly defines bay windows (requiring full counting for non-compliant designs), regulates light well positioning, imposes partial counting for flower pools above 40 meters, and counts all exterior structural columns toward total area. These changes specifically target practices that artificially increase usable space without proper accounting.
Beijing has similarly advanced ahead of other markets in refining approval standards for residential projects. According to Guo Yi, Chief Analyst at Heshuo Institution, the capital’s approach focuses not merely on maximizing interior space but on enhancing communal areas including covered walkways, elevated ground floors, and community presentation spaces—elements that truly define quality housing.
Common ‘Area-Stealing’ Techniques Under Scrutiny
Developers have employed numerous techniques to artificially boost space efficiency ratios, practices now facing increased regulatory attention. Yan Yuejin, Vice President of the E-house China Research and Development Institute, identifies several common methods:
– Semi-enclosed balcony designs intended for post-delivery enclosure to expand interior space while avoiding proper area counting
– Equipment platforms labeled as air conditioner spaces but designed with removable partitions for conversion to interior rooms
– Reducible bay windows with lower-than-standard sill heights that can be removed to increase usable area
– Encroachment into light wells, elevator halls, and corridor spaces to expand living areas and bedrooms
The Measurement Illusion: When Numbers Don’t Reflect Reality
Some marketed space efficiency ratios create fundamentally misleading impressions. In Changsha, one development advertised a 138-square-meter unit with a 123% space efficiency ratio by including 8.84 square meters of elevator lobby space in its calculation—area that isn’t privately usable. Similarly, many projects count convertible spaces at full value despite regulatory requirements that only portions of such areas should contribute to total measurements. These practices have prompted the Changsha Real Estate Transaction Industry Association to issue guidance on proper space efficiency ratio marketing, noting that claims exceeding 100% “easily cause misunderstanding and controversy.”
Market Impact: Beyond the Numbers Game
Initially, properties with extremely high space efficiency ratios achieved strong sales performance as buyers responded to apparent value propositions. However, market data suggests this advantage is diminishing as these products proliferate and consumers become more discerning.
Declining Performance Despite High Ratios
CRIC research identifies multiple cases where high space efficiency ratios alone no longer guarantee sales success. A Wuhan high-speed rail TOD super-high-rise project featuring 97-98% space efficiency and the lowest prices in its sector (13,700 yuan/square meter) achieved only an 18% sales rate at launch. In Chongqing, concentrated launches of new regulation projects have caused customer fragmentation and declining sales rates, with some fourth-generation projects selling below 30% of inventory since July.
Li Yujia, Chief Researcher at the Guangdong Provincial Urban and Rural Planning Institute’s Housing Policy Research Center, notes that extremely high space efficiency ratios essentially represent a form of disguised price reduction that particularly impacts older projects and second-hand homes. As similar products proliferate, competition intensifies, requiring developers to combine multiple advantages including prime location, complete amenities, competitive pricing, and upgraded finishes.
The Future Direction: Quality Over Quantity
Industry experts agree that the regulatory movement aims to refocus the market from competing on superficial metrics toward genuine quality improvement. The space efficiency ratio phenomenon represents just one aspect of this broader transition.
Raising Baseline Standards Across Categories
According to Li Yujia, luxurious design and high space efficiency represent just one category of quality housing rather than the exclusive definition. Future development should focus on “raising the baseline” across all housing types—whether luxury units, large apartments, ordinary homes, or affordable housing—by improving fundamental standards including ceiling height, floor thickness, wall longevity, elevator configuration, and sound insulation.
Regulatory interventions serve dual purposes: protecting the second-hand market from unfair competition while encouraging developers to invest in communal areas that enhance long-term living experience and property value. As Guo Yi notes, Beijing’s approach emphasizes strengthening communal spaces like covered walkways and elevated ground floors—elements that truly contribute to residential quality and community living.
The space efficiency ratio crackdown represents part of China’s broader “good housing” initiative promoting green, low-carbon, intelligent, and intensive development directions. Rather than pursuing purely numerical advantages, developers must now focus on holistic quality improvements that deliver genuine consumer value and sustainable community development.
Navigating the New Measurement Landscape
For market participants, the regulatory changes require adjusted evaluation frameworks and investment approaches. The space efficiency ratio remains a relevant metric, but must be understood in proper context and verified against actual deliverable space rather than marketing claims.
International investors should recognize that the regulatory tightening ultimately supports market健康发展 by reducing information asymmetry and promoting quality-based competition. While some short-term market disruption may occur as developers adjust projects, the long-term effect should be increased transparency and more sustainable development practices.
Industry professionals should monitor regulatory developments across cities as measurement standards continue evolving toward national consistency. Developers must reevaluate project designs to ensure compliance while maintaining market competitiveness through genuine quality improvements rather than measurement manipulation.
The movement toward accurate space measurement represents a positive evolution in China’s real estate market maturity. By focusing on deliverable quality rather than numerical illusions, the industry can build better housing that serves consumers’ actual needs while supporting sustainable market development.
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